European shares follow Asia higher
Stocks in Europe and Asia rose Friday as investors speculated governments would step up efforts to revive the global economy and lower oil prices lifted retailers.
Rio Tinto increased 3.2 percent, leading a rally in raw-material producers, Europe’s worst performing industry group in 2008. Carrefour added 3.8 percent as crude slid more than 7 percent. Samsung Electronics climbed 4.2 percent as South Korea’s president pledged to counter the economic slowdown.
The MSCI World has gained 3.5 percent this week, extending its advance to 20 percent since Nov. 20. Stocks have climbed as U.S. President-elect Barack Obama pledged to stimulate growth with the biggest infrastructure investment since the 1950s and the Federal Reserve cut interest rates to as low as zero percent to combat the worst global financial crisis in seven decades.
“We’re turning the page,” said Jacques Porta, a fund manager at Ofi Patrimoine in Paris. “We’ve left the page of panic and deep recession. Expectations of Obama and his plan are enormous.”
The MSCI World added 0.5 percent to 925.08 at in London. The gauge of 23 developed countries dropped 42 percent in 2008 as credit-related losses and write-downs at financial firms that topped $1 trillion pushed the U.S., Europe and Japan into the first simultaneous recessions since World War II.
Europe’s Dow Jones Stoxx 600 Index climbed 2.1 percent as Siemens advanced. The MSCI Asia Pacific excluding Japan Index increased 0.8 percent. ZTE led gains among telephone-related shares after China said it will issue licenses to providers of high-speed services.
All 19 industry groups in the Stoxx 600 slid at least 18 percent in 2008 as the measure tumbled 46 percent for the worst annual decline on record. Gauges of banks and miners both retreated 65 percent as losses at financial firms topped $1 trillion and the Reuters/Jefferies CRB Index of 19 raw materials dropped a record 36 percent.
The Standard & Poor’s 500 Index ended every day of 2008 below its closing level of 2007, the first time since 1977 that the gauge never produced a profit, according to Bespoke Investment Group. The S&P 500 lost 38.5 percent in 2008, the steepest annual drop since 1937.
Rio Tinto, the mining company, added 3.2 percent to £15.38. Copper traded at $3,050 a metric ton in London. The metal traded at less than $2,940 per ton as stock markets in Europe closed on Wednesday.
Carrefour, Europe’s largest retailer, rose 3.8 percent to €28.57. DSG International, Britain’s biggest consumer-electronics retailer, gained 2.9 percent to 18 pence.
Oil fell below $42 a barrel in New York, extending its worst yearly drop, on concern that a global economic contraction will limit fuel demand. Crude for February delivery dropped as much as 7.9 percent to $41.08 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
Samsung, the world’s biggest computer-memory chip maker, added 4.2 percent to 470,000 won. Hyundai Motor, the largest South Korean automaker, gained 5.6 percent to 41,700 won.
“We won’t waste a minute or a second in examining economic conditions every day and coming up with measures,” South Korea’s President Lee Myung Bak said in a new-year address televised live. “Most of all, we have to ensure money flow in the markets first.”
In Hong Kong, ZTE, a Chinese maker of phone-network equipment, climbed 11 percent to 22.50 Hong Kong dollars. China Telecom, the biggest Chinese fixed-line phone company, gained 6.2 percent to 3.07 dollars.
The Ministry of Industry and Information Technology, which regulates the country’s telecommunications industry, said Wednesday that it would “prudently” award permits to provide high-speed wireless services.
Siemens added 3 percent to €54.27. The company’s chief executive officer, Peter Löscher, told the Boersen-Zeitung newspaper that it may acquire companies if it makes strategic sense.
European media stocks climbed after Citigroup raised its recommendation on the industry to “overweight,” saying favorable currency moves may boost earnings. The broker highlighted Vivendi and WPP Group among their top picks within the group.
Vivendi, the French media company, added 1.7 percent to €23.67. WPP, the advertising company, gained 1 percent to 406.5 pence.
Only three of 89 major indexes tracked by Bloomberg posted gains in 2008, as equities lost $29 trillion in value. Ghana’s All-Share Index was the best performer, surging 60 percent. An offshore oil discovery and government spending on roads and other projects lifted stocks in the country sandwiched between Togo and Ivory Coast.
Banks and financial-services companies accounted for the Stoxx 600’s six biggest declines in 2008. Last year’s slump left the index valued at 9.3 times profit, compared with an average ratio of 26 since 2002, data compiled by Bloomberg show.
“The mindset may be that the turmoil of 2008 is now behind us and that 2009, although not set to be great, needs to start with a bang,” said Jimmy Yates, a dealer at CMC Markets in London. “With many traders still not back at their desks until Monday we will yet again see some thin volumes and maybe a degree of volatility.”